Yahoo Surprises Again with Profitable Quarter

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Yahoo Surprises Again with Profitable Quarter

Beating most Wall Street projections, Yahoo! on Wednesday posted a 1997 first-quarter profit - the second straight quarter in which Yahoo has surprised analysts with profits. The company also said its traffic had grown to an average of more than 30 million page views per day - a 50 percent increase over its daily rate only three months ago.

"We have been executing according to our business plan," said Yahoo CFO Gary Valenzuela, when asked whether the quarter met the company's own expectations.

The consensus of analysts surveyed by First Call had predicted that the company would lose three cents per share for the quarter ending 31 March. Instead, Yahoo turned a modest one cent per share profit - a net of US$210,000 on revenues of $9,515,000.

Robertson Stephens analyst Keith Benjamin said he had been revising his estimate of Yahoo's results upward in recent weeks. "Nine million [in revenue] would have been a little disappointing; $9.5 million was within expectations," Benjamin said. "The company had been giving out hints at conferences in recent weeks that traffic was way up." But Benjamin's reaction to the company's reported 50 percent growth in daily page views since last December was a long whistle.

"I think Yahoo's the winner here," Benajamin said. "The question is whether or not advertisers are going to continue to pony up for this audience." While Yahoo sold advertising on some 25 percent of its available inventory of pages in the fourth quarter of 1996, the dramatic increase in traffic was accompanied by a drop in inventory sold below 20 percent in the first quarter - traditionally a weak quarter for advertising sales.

"The focus is to increase the absolute number of pages sold quarter to quarter," Valenzuela said. Based on the company's announced numbers, it must have met its own criteria - the number of pages sold appears to have jumped from approximately 5 million to some 6 million per day in the past three months.